Background
A client was seeking finance to assist with an open bridging loan to purchase a property in a retirement village, whilst preparing her current owner-occupied unencumbered property for sale. She wanted to look at a minimum 12-month term to allow time for cosmetic renovations to be completed and an improvement in the housing market over the summer. The loan amount was $450,000 with a low LVR against existing security in a good location.
Challenge
The customer is in the later stage of life and her main bank wouldn’t support an open bridge scenario as she was unable to demonstrate enough income to service the loan.
Mitigants
- Low LVR
- A clear exit with the sale of the existing owner-occupied property in a good location
- Client also had other assets that she could sell if needed
- Client had savings available to assist with servicing during the loan term
- Clear credit
- Excellent account conduct.
Solution
A Near Prime First Mortgage secured against her current owner-occupied property – assessing servicing using interest-only payments at our Near Prime interest rate of 9.15% p.a.
We were able to mitigate the shortfall in servicing and avoid a hardship situation as the client had ample funds in savings to assist during the proposed 12-month term. She also had a clear exit strategy with the sale of her current home once the renovations were completed.
This enabled her to secure her dream retirement home and provide the flexibility to complete renovations and sell her home when she felt the time was right.
Loan amount: $450,000
Interest rate: 9.15% p.a.
Term: 12 months interest-only with remaining Principal and Interest term
Avanti fee: $705
Adviser fee: 1% of the loan amount
Commission: 0.80% (subject to an up to 24-month clawback)
Rates and fees were valid at the drawdown of the specific loan facility in each case study, new loans are subject to the rate at application. A copy of our current rates and fees can be found here.